Sesa Goa gets SEBI nod for open-offer

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Mumbai, Apr 6: Sesa Goa confirmed that it has received clearance from the Securities and Exchange Board of India (SEBI) to start the open offer of up to 20% of the shares of Cairn India. Sesa Goa will launch the open offer by April 11, 2011. The price will be Rs 355 per Cairn India share. Whether the company should have a controlling stake with the acquisition of 51%-60% of Cairn India by the Vedanta Group will require approval by the Government of India.

The Supreme Court has lifted the ban on iron ore exports from Karnataka, effective April 20, 2011. In July 2010, the Karnataka Government had banned iron ore shipments from 10 ports and stopped transport of iron ore to other ports for exports, to curb illegal mining.

The price of iron ore in international market has increased over the last six months due to improved demand from China. Freight rates have also increased.

A report from Angel Brokerage says, "We believe higher iron ore prices will offset the rise in expenses. Further, lumpiness in iron ore demand, huge swings in iron ore prices, logistical issues in Goa and stricter regulations imposed by governments are the key concerns for Sesa Goa in the near-to-medium term."

Vedanta announced last August that it would buy up to 60 percent of Cairn India for $9.6 billion; this will also include Sesa Goa"s open offer.

Vedanta has offered Cairn Energy Rs 405 a share, including a non-compete fee of Rs. 50 a share. On the other hand Sesa Goa has offered Rs 355 a share to Cairn India's minority shareholders.

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